MARKET REPORT: Hopes of US debt-ceiling deal lifts global markets

Global stock markets ended the week in positive territory amid hopes that US politicians are getting closer to a deal to extend the US debt ceiling.

In a more stable day for major global benchmarks, the FTSE 100 rose 0.7 percent, or 56.33 points, to 7,627.20, while Germany’s Dax rose 1.2 percent and France’s Cac 40 added 1.2 percent.

On Wall Street, the S&P 500 rose 1.3 percent, the Dow Jones gained 0.9 percent and the tech-heavy Nasdaq rose 2.2 percent.

As negotiations between President Joe Biden and House Speaker Kevin McCarthy continue, the couple is close to signing an agreement that would raise the US government’s debt ceiling.

A deal must be reached by June 1, otherwise the US will default on its debt, hitting the economy and sending financial markets into a panic.

Michael Hewson, an analyst at CMC Markets UK, said shares enjoyed “a late-week rally after a negative week for shares overall.”

He added: “The more positive mood appears to be driven by some optimism that we could see the framework for a debt ceiling deal beginning to unfold, with more details expected to emerge over the weekend as we focus by next week’s deadline.” ‘

Rio Tinto led a rally among mining shares following a vote of confidence by the City. Morgan Stanley said the Anglo-Australian FTSE 100 firm, which has been hampered by setbacks and environmental challenges, “appeared to have turned around.”

He said shares have been hit by demand concerns around China and a drop in iron ore prices. But analysts said it was a ‘business with high-quality assets, a growing copper footprint, [and] improve operational performance. As a result, the investment bank upgraded it from ‘equal weight’ to ‘overweight’.

The shares, which have fallen around 15 percent so far this year, gained 3.5 percent, or 167 pence, to 4,925 pence.

There were gains across the sector, with Antofagasta rising 2.9 per cent, or 39.5p, to 1389.5p while Anglo American added 2.3 per cent, or 51.5p, to 2318.5p, Glencore gaining 1.5 per cent, or 6.2p, to 422.65 p, Endeavor Mining was up 2.2 percent, or 44p, to 2010p and Fresnillo was up 0.5 percent, or 3.4p, to 656p.

But it was a slow session for homebuilders. Persimmon rose 0.5 percent, or 6.5 pence, to 1,226 pence after Deutsche Bank Research issued a ‘sell’ rating and cut the price target to 1,212 pence from 1,267 pence.

The broker cut its profit forecast for the year to £354m from £444m to reflect “volume and margin pressure”. He also issued a ‘hold’ rating for the Vistry Group, down 1.5 percent, or 11 pence, to 740 pence, and Taylor Wimpey, which fell 1.5 percent, or 1.75 pence, to 115.65. pence

M&G gained 3.3 percent, or 6.3 pence, to 198.35 pence after Morgan Stanley raised the asset manager’s price target to 270 pence from 247 pence.

Cybersecurity firm Darktrace sank 11 percent, or 32 pence, to 260 pence after Bank of America Merrill Lynch gave the stock an “underperforming” rating.

Kin and Carta warned their revenue would be lower than expected following industry-wide troubles and contract delays.

The technology consulting firm said clients have paused in committing to spending on large work programs, meaning its revenue for the year through the end of July is expected to be flat.

Its shares fell 9 percent, or 6.4 pence, to 64.9 pence.

The UK commercial property REIT rose 0.4%, or 0.2 pence, to 51.2 pence after selling a warehouse it has owned since 2009 for £74m, divesting its Wembley logistics asset to Covent Garden IP Limited.